KOLEJ UNIVERSITI TUNKU ABDUL RAHMAN

FACULTY OF ACCOUNTANCY, FINANCE AND BUSINESS

SEMESTER 1
2021/2022

ABBE1033 ECONOMICS

TUTORIAL 1: INTRODUCTION
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Section A: Multiple Choice Questions

1. Economics is defined as ______________.

A. science of efficiency C. study of markets
B. science of scarcity D. study of human activity

2. The economic problem of scarcity refers to ______________.

A. limited wants and unlimited resources
B. unlimited wants and unlimited resources
C. limited resources and unlimited wants
D. limited resources and limited wants

3. Which of the following is a positive economic statement?

A. I hope unemployment comes down soon.
B. I think everyone should sacrifice to reduce the deficit.
C. If taxes are reduced, unemployment would drop.
D. Government control of rent is injustice.

4. Normative economics is ______________.

A. usually incorrect C. the analysis of what is
B. a statement of fact D. the study of what ought to be

5. Microeconomics is the branch of economics that deals with human behaviour and
choices as they relate to ______________.
A. what is
B. what should be
C. relatively small units in the economy
D. aggregates or the entire economy

6. A production possibilities curve illustrates ______________.

A. scarcity C. consumer preferences
B. market prices D. the distribution of income

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7. If there is always a three-for-one tradeoff between goods X and Y, then the PPF
between X and Y is _________________.

A. a downward-sloping curve that is bowed outward.

B. a downward-sloping curve that is bowed inward.
C. a downward-sloping straight line.
D. an upward-sloping straight line.

8. The PPF between goods X and Y will be a downward sloping ______________.

A. straight line if increasing opportunity costs exist.

B. straight line if decreasing opportunity costs exist.
C. curve that is bowed outward if increasing opportunity costs exist.
D. curve that is bowed outward if constant opportunity costs exist.

Section B: Essay Questions

1. (a) Describe any TWO (2) types of resources with examples. (6 marks)

(b) Define “scarcity” and explain any TWO (2) effects of it. (6 marks)

2. (a) Distinguish between:

(i) microeconomics and macroeconomics. (4

marks)

(ii) positive economics and normative economics. (4

marks)

(b) State whether each of the following statements is a positive or normative

statement:

(i) When consumer’s income increases, food consumption at Burger

Queen also increases. (1 mark)

(ii) The government should lower the driving speed in school zones to
reduce accidents. (1 mark)

(iii) An increase in interest rates will discourage investments. (1 mark)

(iv) Low-income groups should pay lower taxes compared to high-income

groups. (1 mark)

(v) Government should ban smoking instead of drinking alcohol because

smoking is more harmful than drinking alcohol. (1 mark)

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3. (a) Define “production possibility frontier (PPF)”. (3 marks)

(b) Using production possibilities frontier (PPF) diagrams, distinguish between

‘bowed outward PPF’ and ‘straight line PPF’. (10
marks)

4. (a) Using a production possibilities frontier (PPF), explain the following concepts:

(i) Opportunity cost; (4 marks)

(ii) Productive efficiency; (4 marks)

(iii) Economic growth. (4 marks)

(b) Using a production possibilities frontier (PPF), explain the concept of

‘attainable’ and ‘unattainable’. (7 marks)

5. (a) Using a production possibilities frontier (PPF) diagram, illustrate the impact of
war on a nation’s economic growth. (6 marks)

(b) Explain any TWO (2) factors that can shift the production possibility frontier
(PPF) outwards. (4 marks)

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